TMI Blog1981 (7) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... 22-7-1981 - PATHAK R.S. AND VENKATARAMIAH E.S. JJ. S.T.Desai, Senior Advocate (Mrs. Anjali K. Verma and J.B. Dadachanji, Advocate, with him), for the appellant. A.K. Sen, Senior Advocate (A.V. Rangam, Advocate, with him), for the respondent. -------------------------------------------------- The judgment of the Court was delivered by VENKATARAMIAH, J.- The appellant in these three appeals by special leave is a company engaged in the business of manufacture and sale of art silk yarn. It has its factory at Sirumugai in the District of Coimbatore in the State of Tamil Nadu. The appellant is registered as a dealer carrying on business at Coimbatore. In the course of its business, it sold during the relevant period large quantities of art silk yarn to various purchasers some of whom were weavers residing in the States of Maharashtra and Gujarat who had been issued cards under a scheme called "Export Promotion Scheme" entitling them to buy specified quantities of art silk yarn from specified manufacturers. The question involved in these appeals relates to the exigibility of the sales effected in favour of Export Promotion Scheme card-holders belonging to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Coimbatore, for the year 1964-65, the appellant claimed that the sales of art silk yarn through its agent at Bombay were not inter-State sales as defined by section 3(a) of the Act as the movement of the goods in question from the State of Tamil Nadu to the State of Maharashtra or the State of Gujarat was not occasioned by the sales in question and that they were in fact sales which had taken place outside the State of Tamil Nadu. The Joint Commercial Tax Officer rejected the contention of the appellant and treated the sales effected in favour of the Export Promotion Scheme card-holders through the appellant's agent at Bombay as inter-State sales and levied tax under the Act accordingly. He also revised the orders of assessment for the years 1962-63 and 1963-64 bringing to tax the turnover relating to transactions of similar nature during those years. In the appeals filed by the appellant against the order of assessment for the year 1964-65 and of the revised assessment for the years 1962-63 and 1963-64 before the Appellate Assistant Commissioner (Commercial Taxes), Coimbatore, the orders passed by the Joint Commercial Tax Officer were affirmed. The appellant then filed three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn the allocation card to the distribution committee, with suitable remarks on the card and a covering letter explaining the reasons for returning the card. 6.. Allocation cards shall be returned to the distribution committee after the delivery of yarn has been completed. " At the back of his allocation card, in column 4(a) the appellant is shown as the manufacturer and in column 4(b) the quantity allotted is shown as 273 kgs. Column 5 of the allocation card shows that a quantity of 268 kgs. had been supplied as per invoice No. BC/132. Then we have invoice No. BC/132 prepared in the name of the appellant by its agent, Rayon Yarns Import Co. Pvt. Ltd. and signed by the agent for and on behalf of the appellant. The cases containing goods sold had been marked as 5829, 8479 and 8505. The invoice contains a note which reads as follows: "We have charged you 2 per cent Central sales tax for which purpose you are required to send us immediately your regular 'C' form correct in all respects as required by the law in force for the time being in the absence of which you are required to remit us balance sum of Rs.......being the difference between the rate charged and the revised rate at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een supplied expressly against the quota allotted under the allocation card. Admittedly the allocation card bearing No. 3124 was issued on November 7, 1963, and it required the appellant to offer to sell the quantity of art silk yarn mentioned in it to the purchaser within seven days without even waiting for the purchaser approaching the appellant with a request to supply the goods in question. The card contemplated a contract of sale to be completed within twenty-one days of the date of its issue. The invoice in question contained the number of the allocation card. In the letter dated May 23, 1964, the agent requested the appellant to send the cases bearing Nos. 5829, 8479 and 8505 by lorry from Sirumugai and the said boxes were later on admittedly delivered to the purchaser on June 3, 1964. These facts cumulatively suggest that the goods in question had been transported from the factory site of the appellant to Bombay for delivery to the purchaser as a result of the contract of sale established in accordance with the terms of the allocation card. It is, however, argued on behalf of the appellant relying upon the decision of this Court in Tata Engineering and Locomotive Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k place between the appellant and the allottee within twenty-one days of the issue of the allocation card was lacking in this case. Evidence about these facts was within the knowledge of the appellant and the appellant had not placed it before the assessing authority. It is likely that if such evidence had been produced it would have gone against the appellant. Even apart from that the finding recorded by the assessing authority, the appellate authority, the Tribunal and the High Court on the basis of the terms of the allocation card and other material on record that there was a contract of sale within the stipulated time between the appellant and the allottee of art silk yarn is unassailable. In the circumstances no assistance can be derived by the appellant from the case of Tata Engineering and Locomotive Co. Ltd. [1970] 26 S.T.C. 354 (S.C.). The decision of this Court in Kelvinator of India Ltd. v. state of Haryana [1973] 32 S.T.C. 629 (S.C.). relied on by the appellant has also no bearing on this case. The assessee in that case had its factory where it manufactured refrigerators at Faridabad in the State of Haryana and it moved the goods manufactured by it to its godown at De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods which were sent to the Bombay buyer. When the movement of goods from one State to another is an incident of the contract it is a sale in the course of inter-State sale. It does not matter in which State the property in the goods passes. What is decisive is whether the sale is one which occasions the movement of goods from one State to another. The inter-State movement must be the result of a covenant, express or implied, in the contract of sale or an incident of the contract. It is not necessary that the sale must precede the inter-State movement in order that the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It will be enough if the movement is in pursuance of and incidental to the contract of sale. When a branch of a company forwards a buyer's order to the principal factory of the company and instructs them to despatch the goods direct to the buyer and the goods are sent to the buyer under those instructions it would not be a sale between the factory and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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